* Chinese rate rise puts pressure on global shares
* Blizzard in northeast U.S. limits U.S. trade
* Oil prices come off 26-month high after China move.
(Updates prices)
By Daniel Bases
NEW YORK, Dec 27 (Reuters) - China's Christmas Day interest
rate rise and a severe blizzard that blanketed the northeastern
United States left U.S. share prices weak and the U.S. dollar
lower in thinly traded markets on Monday.
The Dec. 25 rate increase by the People's Bank of China was
the second in just over two months, and while the timing just
before year-end may have been a surprise, the move itself was
not.
European stock markets fell in response to China's move,
although with the UK on holiday until Wednesday, trading
activity was limited.
Global share prices were mostly lower on Monday but are
still hovering near highs of more than two years. Commodity
prices were mixed, with oil off a 26-month peak, gold down
marginally but grain prices generally stronger.
The euro rose to its best levels in a week against the
greenback.
Shanghai's benchmark stock index <> fell 1.9 percent
on the day, down 15.127 percent year-to-date as investors have
been anticipating tighter lending policies by the central bank
in an effort to slow rising inflation. []
"In the long run, this is going to be healthy for the
Chinese economy, but the instinctive market reaction is that
this is going to be bad for global demand, giving investors a
reason to sell off equities," said Quincy Krosby, market
strategist with Prudential Financial in Newark, New Jersey.
In mid-morning New York trade, the Dow Jones industrial
average <> fell 29.40 points, or 0.25 percent, at
11,544.09. The Standard & Poor's 500 Index <.SPX> lost 1.07
points, or 0.09 percent, at 1,255.70. The Nasdaq Composite
Index <> dropped 8.24 points, or 0.31 percent, at
2,657.36.
In Europe, the FTSEurofirst 300 <> ended 0.87 percent
lower at 1,137.49.
The MSCI index of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 0.04 percent with Japan's Nikkei <>
closing up 0.75 percent, extending its recent outperformance in
Asia.
The MSCI All Country World index <.MIWD00000PUS> dipped
0.21 percent, and the Thomson Reuters global stock index
<.TRXFLDGLPU> lost 0.26 percent.
China's central bank said on Saturday it would raise the
benchmark lending rate by 25 basis points to 5.81 percent and
lift the benchmark deposit rate by 25 basis points to 2.75
percent.
On Monday the PBOC took aim at inflation once again by
saying prudent monetary policy would be helpful in combating
price pressures and asset bubbles. []
EURO GAINS
The normally thin post-holiday trading was made more so by
a severe blizzard that shut down some commuter transport
networks, forcing New York trading desks to operate with
skeletal staffing.
The euro rose after shaking off losses below its 200-day
moving average -- $1.3087, according to Reuters data.
A move below that level is usually indicative of more
losses. While fears that a euro-zone debt crisis could spread
have pushed the euro below the 200-day moving average in five
of the last six sessions, it has rebounded swiftly each time.
It was last up 0.15 percent at $1.3135 <EUR=>.
"With no economic news, we're focusing on these technical
factors, and that push above the 200-day average has been a
catalyst for the euro," said Omer Esiner, strategist at
Commonwealth Foreign Exchange in Washington. "And with London
off and the blizzard in New York, things are very subdued."
The dollar rose 0.07 against the yen at 82.92 <JPY=>, after
dropping to a three-week low in Asian trading hours.
The Australian dollar fell as low as $0.9987, though it
clawed back to $1.0025 <AUD=>, nearly flat on the day. The
currency hit a six-week high of $1.0067 last week.
U.S. Treasuries prices trimmed losses after the auction of
$35 billion in two-year notes at 1 p.m. (1800 GMT).
Benchmark 10-year notes reversed course to trade 1/32 of a
point in higher price, pushing the yield down to 3.39 percent
<US10YT=RR>.
Oil prices pulled back from a 26-month high in light of
China's action, which countered the influence of severe cold
weather in the United States and Europe.
U.S. light sweet crude fell 42 cents <CLc1>, or 0.46
percent, to $91.09 per barrel, and spot gold prices <XAU=> fell
$4.71, or 0.34 percent, to $1379.50.
(Additional reporting by Steven C. Johnson, Angela Moon and
Mike Peacock; Editing by Padraic Cassidy)
